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Sen. Warner floats limits on speed of stock trades

Sen. Mark Warner (D-Va.) floated the idea on Monday of restrictions on the frequency of stock trades in the wake of a sudden drop last week.

Warner, a member of the Senate Banking Committee, said that limits on high-frequency trading, which he's said contributed to a sudden, 1,000-point drop last week in the Dow, might be a good rule to prevent future similar instances.

"I'm not saying what the answer is -- maybe there needs to be speed limits in the system," Warner said Monday during an appearance on CNBC. "Even in NASCAR, they only build the car to be a certain speed."

While the Dow recovered some of the losses in last Thursday's drop, regulators including the Securities and Exchange Commission (SEC) have not yet identified the exact cause of the drop. Warner and Sen. Ted Kaufman (D-Del.) have proposed an inquiry into the causes of the crash.

Sen. Judd Gregg (R-N.H.), appearing alongside Warner on CNBC, said it would be premature to include regulations on high-frequency trades in the current Wall Street reform bill before the Senate, as long as the exact causes of last week's drop haven't yet been identified.

Warner said that forethought would be key to insulating the market from any havoc that high-frequency trades could wreak.

"I have this strange feeling that high-frequency trading could be the next wave, the way derivatives, CDSs, and some of the swaps business that started in 2002-03," he said. "We didn't seem to know enough about it then. We ought to try and get ahead of this one."